Here at DonorSearch’s blog, we strive to include the best content we can regarding prospect research and, more broadly, the nonprofit sector. With that goal in mind, we feature posts by guest authors from time to time to bring in a fresh perspective and new ideas. This guest post was written by Samantha Swaim of Swaim Strategies.
DonorSearch aims to provide the best content available regarding prospect research and its surrounding topics. In an effort to ensure that our readers have access to as much valuable information as possible, we feature content from guest authors from time to time. This week, we’ve reached out to Marcella Vitulli of EveryAction for her insights regarding major gifts.
You’ll find Vitulli’s article posted below.
8 Things to Remember When Creating a Major Gifts Campaign
Many nonprofits still rely heavily on collecting major gifts to reach their fundraising goals. Major gifts are a great way for many to take care of big chunks of their budget in one (or several) fell swoops. A single major gift could fund an entire program, a few staff salaries, and give your organization stability and certainty.
Sounds good right? However, a successful major gift campaign requires a strategic approach to prospect nurturing and engagement. You need to build a strong relationship with your prospects over a long period of time before, ultimately, making the ask for a major gift if you want them to give. This kind of approach requires you to play the long game, with incredible amounts of focus and planning needed to meet your goals.
But fear not! Read on, and become a master in the art of major gifts.
Establish Goals and Objectives
Establishing objectives for your campaign is hugely important as they will guide all communications and outreach, and will serve as a baseline for measuring your success.
When setting them, remember to make them SMART, as in: Specific, Measurable, Achievable, Realistic, and Timely.
Target Prospect List
If you want all that planning and effort to count, you’ll want to focus it in the right places. Your prospects for a major gifts campaign aren’t going to be part of the general public – instead, identify people with the inclination and means to help you out.
The next step is a description for each of your targets. You should create a profile of each target, complete with a picture. You’ll need to know these people better than your best friend.
Here are some questions to ask yourself about each persona:
What are the demographics of this person? (Age, education, location, etc.)
What goals might this person have?
What are their biggest challenges and how do they work to overcome them
How does this person find, consume, and share content?
Prospect research and annual giving go together like peanut butter and jelly, like Simon and Garfunkel, like Turner and Hooch.
What I mean to say is that prospect research and annual giving are a great pair, and prospect research should certainly be used to assist your annual giving campaigns.
To best explain how the two fundraising components fit together, we’ve provided detailed answers to the 4 most common questions regarding the relationship between prospect research and annual giving.
Back testing over 2 million donor records showed a strong correlation between specific philanthropy and wealth markers and future philanthropy. Unlike traditional wealth analysis, which has long been the standard for donor prediction in the industry, past philanthropy proved to be a much more accurate indicator of future philanthropy.
Wealth, particularly as evidenced by the value of real estate owned by the prospect, correlated with both the inclination to give and the capacity to give. However, stronger predictors of future philanthropy were past giving to the nonprofit, past giving to other nonprofits, political giving, and other factors.
Wealth, however, plays a greater role in formulating ask amounts, although philanthropy to other nonprofits is also a significant factor. Formulating an ask amount is a two-step process: determining the prospect’s capacity to give, and analyzing the amount the prospect has given to other nonprofits.
Major Giving Defined
Major giving can vary by amount and type, depending upon the nonprofit and the need: for a smaller nonprofit, a four-figure donation might be a major gift, while larger organizations may consider six- or seven-figure checks a major donation.
Major giving can also vary by type:
1. Annual campaign, a gift given in response to an annual fund-raising campaign
2. Event sponsorship, a gift given to partially or completely sponsor an event
3. Capital campaign, a gift given to support a specific purpose or project, such as a new facility, piece of equipment or program
4. Major gift, a gift not given for the previous three reasons
5. Planned giving, a gift given prior to death (annuity-based) or after death (bequests and other gifts from an estate; can take a variety of forms)
This white paper will focus on the first four types of gifts, because the donors and the strategies for identifying them are similar. Planned giving donors, and the markers that identify them, vary greatly from other types of prospects in significant ways.
This is not to discount the value of a planned giving campaign: according to Giving USA 2015, bequests totaled $28.13 billion in 2014, or 8% of all charitable donations ($358.38 billion). Of the total amount, individuals gave 72%, foundations 15% and corporations 5%.
Stratification Among Major Givers
Nonprofit donors fall into three groups based on the amount of donations, which require three different types of engagement strategies:
At DonorSearch, we love providing useful fundraising tips for major gift officers through our blog. So we asked our friends at DoJiggy to share some common major gift officer mistakes and how organizations can avoid them.
In the world of fundraising, major gifts can be transformational for an organization. Many nonprofit organizations realize that major gifts often require substantial cultivation but are very high value and crucial for the organization’s cause.
This is where major gift officers play a critical role. A major gift officer specializes in cultivating successful relationships with these high-level donors over an extended period of time. However, there are plenty of common mistakes that can harm the success of the relationship your team is trying to cultivate.
Mistake #1: Lack of Preparation
Meeting with a major donor is one of the most important aspects of a gift officer’s job. It gives you the opportunity to let your organization and cause shine and is essential to the long-term success of the relationship.
Do not show up to these meetings unprepared, thinking you can just wing it. Unfortunately, this often shows. Major donors’ time is very valuable, and they may take exception if they feel the other party is unprepared. Don’t waste this valuable time!
The key here isn’t just to be prepared for your meeting; it’s to tailor the meeting to your client’s needs and wants. Be clear about the purpose of the meeting, and its agenda. Also, make sure to do your research about the donor or prospect prior to the meeting.
Anticipate their questions, practice your answers. Make sure you have materials on hand that the donor might ask for, like brochures, videos, or other paraphernalia.
Mistake #2: Making the Meeting All About You
Meetings with donors are a great place to talk about your organization and your cause. But it’s a mistake to make the meeting 100% one-sided. This can very easily make the donor feel like they are being talked at, not talked with. You want to have a conversation with them – which involves give and take.
Do talk about your organization, but listen more than you talk.
Ask questions, and listen to the answers. Viewpoint questions are an excellent way to get a prospect to open up and for you to learn more about them. Ask about why your cause is important to them, what motivates them to donate, and what they like best (and least).
Take notes about what they say. Notes aren’t just useful for later follow-up; it also shows the prospect that you care enough about their opinions and answers to write down what they tell you.
Mistake #3: Lack of Follow Up
Many major gift officers can fall into the trap of not following up appropriately, or worse – not following up at all. If you listen to your donor during the meeting, take the right notes, and ask the right questions, following up is a simple but essential task.
You don’t want to be a pest, but following up after a meeting can be as simple and thanking them for their time. If they had any questions that you couldn’t answer on the spot, make sure you follow up with the answers. The follow-up is also a great time to set up your next meeting and keeps the relationship’s momentum going.
Some of these tasks can be managed automatically when using donation software. You can automatically generate “thank you” emails, or set a reminder for a follow-up call. You can also gather and store donor information, so you know exactly what was discussed and be better prepared for your next meeting.
Mistake #4: Not Making the “Ask”
As a major gift officer, you can do everything perfectly, but if you don’t ask for the donation, many times you won’t get it. Or if you do get a donation, it may not be the amount that you are looking to obtain. Sometimes newer gift officers are afraid of asking, or worse – afraid of the dreaded “no.”
There will be “No’s” and that’s okay, you can’t win 100% of the time. But asking is an important part of the process, and so is your attitude. Prepare for a no, expect a yes. If you go in expecting a no, it shows – and you will end up with a no more often than not.
Set up a meeting beforehand, and be transparent about your agenda. Let the donor know that you will be asking so that they can prepare ahead of time. Prepare well beforehand, and know exactly what you are asking for, why you’re asking, and a certain amount. If possible, ask in a way that shows it’s for something specific. “Would you be willing to donate $5,000 to help feed 500 families?” is a lot more effective than “Would you be willing to donate some money to our organization?”
Mistake #5: Not Thanking Them or Giving Proper Recognition
Imagine a world without music: stages bereft of the patters of ballerina feet, theaters stripped of their actors, and galleries deprived of inquisitive conversation. No art. A culture built upon rationality and devoid of its hallmark creativity.
Such a world may never exist, but just like hospitals, schools, and homeless shelters, the human spirit requires funding in order to thrive. Prospect research is the key to how your arts and cultural nonprofit can survive and thrive!
Ticket sales and membership fees won’t fund your organization quite like a major gift will. It’s the difference between eating a pile of Halloween candy instead of one giant slice of dark, dense, creamy chocolate cake. The chocolate cake is more food, more satisfying, and you don’t have to open multiple wrappers to enjoy it.
A few significant donations will help you to attain your fundraising goals better than a plethora of small gifts, and prospect research is the best way to identify major gift donors.
It’s hard to identify new prospects and donors. Like, solve-a-Rubik’s-cube-while-blindfolded-and-with-one-hand-tied-behind-your-back hard. Okay, maybe not that hard, but, without the proper tools, prospect research can be both time consuming and imprecise. Your time is valuable, and you don’t want to spend it searching for and then pursuing the wrong prospects.
We’ll cover the following topics so you can gain a better understanding of how your arts ad cultural nonprofit can benefit from prospect research:
1. How Screening for Arts and Cultural Nonprofits Is Different
Prospect research has a lot of consistency across various nonprofit industries, but hospitals acquire prospects differently than schools who acquire prospects in a unique way from arts and cultural organizations.
How people engage with your nonprofit can dictate when and where to look for major gift prospects. Other nonprofit industries don’t have members and ticket purchasers who are already giving money to your organization.
This makes discovering financially capable prospects different from how hospitals, schools, and other nonprofits identify prospects, and prospect research can fill in all the missing details that can separate potential prospects from those worth pursuing.
Furthermore, your organization is a form of entertainment. From gardens to animals to ballerinas, arts and cultural organizations show off forms of creative work.
Many of the people who come to see your work have a certain amount of personal investment in the subject matter, which makes finding new prospects unique as people have to be passionate about what you create.
As a form of entertainment, you receive plenty of audience feedback. These critiques let you know what prospects care about, as they want these particular things fixed. Or they might love your work! Either way, feedback lets you know who cares about what, so you can use those particulars to both make more specific donation pitches and perform in-depth research on prospects.
Arts and cultural nonprofits have a unique angle for getting to know prospects, and learning how to think about different patrons in order to segment donors for screening is an important skill to learn.
A unique aspect of museums, aquariums, theaters, and other arts and cultural organizations is that they offer memberships. While memberships might demonstrate a sincere loyalty to an organization, they also may represent economical financial decisions more so than a desire to invest in an organization.
For instance, take Gertrude, who attends her local art museum for the first time and discovers that a single day ticket costs $10, while a year-long membership costs $35. Gertrude decides that, between her friends, family, and personal interest in art, she’ll visit at least four times throughout the year, so she purchases a year-long membership. Gertrude becomes a member because she is trying to save money, and not because she wants to contribute more than required to the art museum.
Membership is best looked upon as an indicator of association with your organization, but not a guarantee that people want to donate.
Arts and cultural organizations should disregard membership participants completely, however. Going back to our example, if Gertrude continues to renew her membership year after year, this could be an indicator that she is interested in supporting your organization.
Keeping a record of your organization’s members can offer insights into which donors are likely opting into the program to save money or because they want to support your cause.
Whether you’re a museum, theater, or zoo, your members can play a vital role in your fundraising plan (just check out what this guide from Doubleknot has to say!).
Keep in mind: most major donations to arts and cultural nonprofits do come from members, so, while membership is not a tell-all detail, it is something to pay close attention to.
Single Ticket Purchasers
Arts and cultural organizations also have consistent influxes of single-ticket purchasers. Like memberships, single-ticket purchases don’t indicate any particular affinity for your nonprofit, but they do demonstrate engagement and permit you to open up the conversation about donating.
Special Event Attendees
Special event attendees have a lot of potential to become major gift prospects since galas, museum dinners, and similar events include pricey entrance fees and attract the intelligent elite, who tend to have money to spare.
However, never assume any prospect is or is not a major gift donor without conducting prospect research, as you might miss out on significant donations. Not only is prospect research a best practice for any fundraising campaign, but it can unearth hidden details about consistent donors.
Consistent donors, who tend to be members, are your prime major gift prospects, as they already give and engage with your nonprofit on a regular basis.
A proper wealth and philanthropy screening can unearth previously unforeseen major gift potential among these loyal donors. This allows you to ramp up your gift cultivation from their normal amount to a more significant gift that can improve your nonprofit’s fortunes.
3. How Arts and Cultural Nonprofits Should Perform Prospect Research
// The secret to a successful fundraising campaign is identifying the right prospective donors – those who care about your organization and are able to make a significant contribution. Finding these donors is the tricky part!
Whether you have experienced this problem firsthand or are planning your next fundraising campaign – this article is here to help. We are going to explore the top five factors that most accurately predict future giving.
Based on an analysis of $5 billion in known giving to 400 nonprofit organizations, here are the top five data-driven predictors of future giving:
We’re going to discuss each of these points in detail. Click on any of the links above to scroll to a particular section.
Philanthropy Predictor #1 – Past Charitable Giving to Your Organization
Loyal donors are a nonprofit organization’s best friend. Donors that have given charitably in the past are more likely than the average individual to give in the future.
Of all factors analyzed, past giving to a nonprofit is the strongest predictor of future philanthropy. The evidence is right there in the data.
We know that this may seem like a straightforward conclusion, but it’s crucial to note. Too many nonprofits don’t place enough emphasis on donor retention, and, as a result, miss out on the opportunity to upgrade high-quality, existing donors.
Don’t miss out!
To quantify previous giving, use an RFM score. An RFM score serves as an internal analysis of the relationship you have with each of your prospects.
An RFM score factors in three pieces of data:
Recency of giving: How recently has an individual made a charitable donation?
Frequency of giving: How often has an individual donated? (i.e., weekly, monthly, annually)
Monetary contribution: How much has an individual given?
On your own, you can review your list of existing donors and rank them according to each of these three dimensions (suggested scale of 1-100).
For example, a prospect that has given the most money would receive a high score on the monetary contribution factor whereas a prospect that has given less money would receive a lower score.
After every factor is sorted and rated, the three ratings are added up to make the RFM total. Thus, the closer to 300, the better your relationship is with that donor. If data is unavailable for one of the three fields, then the RFM total will be out of 200 (or 100).
Please note – if you work with a prospect screening company then they should calculate each donor’s RFM score for you.
Philanthropy Predictor #2 – Past Charitable Giving to Other Nonprofit Organizations
Philanthropic giving to other nonprofit organizations is the second most predictive sign of future giving. It makes sense intuitively – people who are already philanthropic are more likely than the average person to give charitably.
What’s particularly interesting is how powerful a predictor this is:
Individuals who have made a gift of over $100k to a nonprofit are 32 times more likely to make a charitable donation elsewhere.
Individuals who have made a gift of $50k – $100k to a nonprofit are 25 times more likely to make a charitable donation elsewhere.
Individuals who have made a gift of $10k – $25k to a nonprofit are 10 times more likely to make a charitable donation elsewhere.
Individuals who have made a gift of $5k – $10k to a nonprofit are 5 times more likely to make a charitable donation elsewhere.
To determine giving to other nonprofits, DonorSearch uses its proprietary annual report philanthropy database, which is the second largest collection of charitable giving data and includes giving information no longer publicly available.
Philanthropy Predictor #3 – Involvement in Nonprofits as a Foundation Trustee or Director
Based on the analysis of charitable giving to over 400 nonprofits, a prospect’s participation as a foundation trustee or nonprofit director is a more powerful signal of future philanthropy than any wealth indicator.
These prospects understand the importance of philanthropy and the work nonprofits do because they have firsthand experience. When you make your fundraising case to them, they’re more inclined to understand where you’re coming from and where’d like to go better than any other prospect.
Simply put, their ingrained knowledge of the fundraising world is a huge benefit to your cultivation process.
Once you’ve successfully acquired a donation from them, there are more benefits to come.
These prospects are valuable because of the connections they bring. Any given foundation trustee or board member is bound to have ties to the other members of their foundation or nonprofit board. And those other members can become high-quality future prospects, too!
Any experienced major gift officer will tell you how difficult it can be to get your foot in the door with a high-quality prospect. Once you’ve developed relationships with a group of foundation trustees or board members, you can ask them to make introductions to other top-notch prospects.
From there, the introduction cycle continues!
Philanthropy Predictor #4 – Political Giving
Political giving is another excellent predictor of future giving.
A single lifetime FEC gift of $250 puts your constituent into the top 6% of the US population. What’s more, a single lifetime FEC gift of $1,000 puts your constituent into the top one tenth of one percent.
The predictive power of political giving is huge:
An individual who has given at least $2,500 in his/her lifetime to federal political campaigns is 14 times more likely to give a philanthropic donation than someone who has not.
An individual who has given at least $500 in his/her lifetime to federal political campaigns is 5 times more likely to give a philanthropic donation than someone who has not.
Why is political giving so predictively powerful? The answer is two-fold:
The size of a prospect’s past political gifts can clue you in to the giving capacity of a particular candidate.
Anyone who gives a political donation is clearly open to making a donation to a cause they feel passionate about. If you can strike a similar chord in your communications with those prospects, you’ll have a greater chance of securing a gift.
The last factor we will focus on is real estate ownership. Given the limits of wealth screening, this is the only true wealth indicator to have made it on our list. Here is what we found:
An individual that owns $2+ million worth of real estate is 17 times more likely to give philanthropically than the average person.
An individual that owns $1-2 million worth of real estate is 4 times more likely to give philanthropically than the average person.
An individual that owns $750K – 1 million worth of real estate is 2 times more likely to give philanthropically than the average person.
What does this tell us?
This correlation between giving likelihood and property worth demonstrates one important fact.
Real estate ownership is more than just a wealth marker; it’s a philanthropic indicator as well.
Just like political giving, its predictive powers are two-fold.
Plus, real estate ownership can be plugged into a larger formula that assists in calculating a donor’s total wealth, which, in turn, helps assess giving capacity scores.
In short, real estate ownership is a wealth marker you can’t afford to look past.
How can nonprofits uncover this information about their prospects?
If you don’t have information about any of the predictors listed within this article, then your organization should consider investing in prospect screening.
Performing prospect research prior to a fundraising campaign will provide you with all the information listed within this article and help your organization prioritize its donors accordingly. That way, your development staff can spend less time doing research and more time fundraising.
If you’re interested in learning more, schedule a demo of DonorSearch’s prospect screening services >